- RBA’s December decision: cash rate likely to hold, questions arise for future increases
- Morgan Stanley’s prediction: Brent crude oil to see strong support at mid $80s
- Reserve Bank of Australia preview – to keep the cash rate on hold, retain tightening bias
- Gold drops $50, back under $2100
- PBOC sets USD/ CNY reference rate for today at 7.1011 (vs. estimate at 7.1271)
- Australian data for inventories, home loans and job advertisements
- Australia Melbourne Institute monthly inflation for November +0.3% m/m (prior -0.1%)
- China infectious disease spike: health authorities recommend reducing large gatherings
- Go-go gold, Jumps to $2100
- UBS warns on rising central bank interest rates as inflation steps down
- Morgan Stanley warns on headwinds for stocks including weaker earnings, cautious firms
- ICYMI – US Senators call for travel ban with China amidst rising respiratory iIlness cases
- US military carries out a strike against Iran-backed drone staging site in Iraq
- US Navy Ship thwarts multiple missile attacks in the Red Sea
- New Zealand data shows Q3 terms of trade fell 0.6% q/q
- Middle East – Weekend attacks on US Navy ship and commercial vessels
- BOJ board member Noguchi said only a possibility the 2% inflation target is in sight
- Trade ideas thread – Monday, 4 December, insightful charts, technical analysis, ideas
- Monday morning open levels – indicative forex prices – 04 December 2023
Weekend:
Gold
was a mover early in the session, rising to highs above USD2140.
There were no fresh catalysts to push it along, it was a continuation
of the Friday rise (and before that of course) in a thinly traded
market at this time of the week. After touching just above $2140 it
fell back over the course of the next few hours to be around $2085 as
I update.
Bitcoin
was another mover, gaining to above USD40K over the weekend and
extending that move to above $40.7K during the timezone here.
USD/JPY
was a mover also, continuing its Friday move too and dropping to
lows circa 146.25. Over the weekend Bank of Japan policy board member
Asahi Noguchi spoke, with comments meant to convey there is no
imminent policy pivot in sight. In
doing so he reiterated similar remarks from fellow board members
Nakamura and Adachi last week. USD/JPY has since bounced back to
146.75 and surrounds.
AUD
and NZD both rose to fresh highs compared to Friday but both gave it
all back and are currently underneath Friday closing prices. CAD, too, is similar. Oil is weaker on the day. While a smoking gun is not
obvious I’m going to highlight the concerns still bubbling over the
recent, and ongoing, outbreak of infectious respiratory illness in
China. China’s National Health Commission (NHC) held a press
conference on Saturday, giving reassurances that this outbreak was due to
known pathogens and that no new infectious diseases caused by new
viruses or bacteria have been detected. Chinese health authorities have
credibility rebuilding still to do. Even if they are to be believed
(let’s give them that benefit for now) there is still the issue for
markets that its not going to take much for the Chinese people to
pull back on economic activity in response to these concerns. Indeed,
as part of the actions the NHC put into place was a recommendation to
reduce large gatherings. Which is not going to be confidence
inspiring.
Yuan
weakened on the day.
As a reminder, the Reserve Bank of Australia meets tomorrow.
The statement is due at 2.30pm Sydney time on Tuesday, 5 December:
- 0330 GMT and 2230 US Eastern time on Monday, 4 December 2023
There are a couple of previews in the points above. The TL;DR is that no change in the cash rate is expected. As an aside we had a private-survey inflation report printed today (also in the bullets above) showing another drop for y/y inflation. Headline y/y fell to its lowest in 19 month, the core fell to its lowest y/y in 17 months. The caveat that I didn’t really see mentioned at all was that m/m rates rose for both headline and core.